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Economy of Thailand

The Thai economy is export-dependent, with exports of goods and services equivalent to nearly 70% of GDP in 2010. Thailand's recovery from the 1997-1998 Asian financial crisis (which brought a double-digit drop in GDP) relied largely on external demand from the United States and other foreign markets. From 2001-2006, the administration of former Prime Minister Thaksin embraced a "dual track" economic policy that combined domestic stimulus programs with Thailand's traditional promotion of open markets and foreign investment. Real GDP growth strengthened sharply from 2.2% in 2001 to 7.1% in 2003 and 6.3% in 2004. In 2005-2007, economic expansion moderated, averaging 4.9% real GDP growth, due to domestic political uncertainty, rising violence in Thailand's three southernmost provinces, and repercussions from the devastating Indian Ocean tsunami of 2004. Thailand's economy in 2007 relied heavily on resilient export growth (at an 18.2% annual rate), particularly in the automobile, petrochemicals, and electronics sectors.

Political uncertainty and the global financial crisis in 2008 weakened Thailand’s economic growth by reducing domestic and international demand for both its goods and services (including tourism). Due to minimum exposure to toxic assets, Thai banks experienced limited direct impact from the global financial crisis. Nonetheless, Thai economic growth slowed to 2.5% in 2008, with fourth-quarter growth dropping below zero. In 2009, the contraction continued. Over the first three quarters, GDP contracted by 5.0% year-on-year on average and hit bottom in the first quarter. To offset weak external demand and to shore up confidence, the Abhisit administration introduced two non-budgetary stimulus packages worth $43.4 billion focusing on key sectors such as mass transit and transportation, irrigation, education, public health, and energy. The Thai economy reversed to positive growth in the fourth quarter (5.9% year-on-year), improving the 2009 full-year average to minus 2.3% year-on-year.

In the first quarter of 2010, the Thai economy surged by 12.0% year-on-year, the highest quarterly growth since 1995. The uptick was mostly due to strong exports (up 32%) from continued global recovery; despite the March-May political protests in Bangkok, growth continued through the second and third quarter of the year. The Thai economy expanded by 9.3% (year-on-year) during the first three quarters of 2010, the second-strongest performance in Southeast Asia, second only to Singapore. The government estimated nearly 8% growth (year-on-year) for full-year 2010 and expects growth to continue into 2011, but at a lower rate (3%-5%). Growth in 2011 is expected to be driven by exports and also domestic demand. Political risk related to the anticipated 2011 general elections, continued appreciation of the baht, and the uncertainties of Thailand’s major trading partners’ economic recovery also could affect the economy. Inflation is expected to gradually climb from the 2010 level (3.3%) to between 3% and 5%, due in large part to higher world commodity prices.

The Royal Thai Government welcomes foreign investment, and investors who are willing to meet certain requirements can apply for special investment privileges through the Board of Investment. U.S. investors may qualify for additional privileges under the Treaty of Amity and Economic Relations. To attract additional foreign investment, the government of Prime Minister Abhisit has promised to look for ways to expand investment opportunities, focusing more on green technology/manufacturers.

The organized labor movement remains weak and divided in Thailand. Less than 2% of the total work force is unionized, although nearly 10% of industrial workers and more than 59% of state enterprise workers are unionized. In 2009, efforts to restructure the State Railway authority met resistance from the powerful railways union, including a short strike that halted trains nationwide, showing that organized labor still has potential political clout. As a result of the global financial crisis and business restructuring, employers hired large numbers of short-term contract workers. While employers claimed to have done this in order to maintain business flexibility for greater competitiveness during financially uncertain times, labor advocates viewed these actions as reducing job security and attempts to weaken the organized labor movement.

Roughly 40% of Thailand's labor force is employed in agriculture, although agriculture accounts for only 12% of GDP (data based on the Thai National Statistics Office.) Rice is the country's most important crop; Thailand is the largest exporter in the world rice market. Other agricultural commodities produced in significant amounts include fish and fishery products, tapioca, rubber, corn, and sugar. Exports of processed foods such as canned tuna, canned pineapples, and frozen shrimp are also significant.

Thailand's increasingly diversified manufacturing sector is the largest contributor to growth. Industries registering rapid increases in production have included computers and electronics, furniture, wood products, canned food, toys, plastic products, gems, and jewelry. High-technology products such as integrated circuits and parts, hard disc drives, electrical appliances, vehicles, and vehicle parts are now leading Thailand's growth in exports. With stronger exports and a rise in inflationary pressure, the Bank of Thailand started to tighten its monetary policy in mid-July 2010 after having followed a low interest rate policy since April 2009. Large surpluses in both the current and capital accounts contributed to the Thai baht's appreciation relative to the dollar throughout 2009 and 2010. Machinery and parts, vehicles, electronic integrated circuits, chemicals, crude oil and fuels, and iron and steel are among Thailand's principal imports.

Through 2010, the United States was Thailand's third-largest single-country export market after China and Japan, and the third-largest supplier after Japan and China. Thailand's traditional major markets have been the United States, Japan, Europe, and ASEAN member countries (Singapore, Malaysia, Indonesia, the Philippines, and Vietnam). Growing export markets include China, Hong Kong, Australia, the Middle East, South Africa, and India. Due to the global economic recovery, Thai exports in 2010 surged by 25.1% from 2009. Thailand is a member of the World Trade Organization (WTO) and the Cairns Group of agricultural exporters.

Tourism contributes significantly to the Thai economy (approximately 6%). The tourism industry began to recover in the last quarter of 2009, but the protests in Bangkok in April and May 2010 drove away some foreign tourists. The heavy floods during October and November and the strong Thai baht had minimal impacts on the industry. Tourism from January to November was on average 12.7% higher than 2009 levels.

Bangkok and its environs are the most prosperous part of Thailand, and the seasonally barren northeast is the poorest. An overriding concern of successive Thai governments has been to reduce these regional income differentials, which have been exacerbated by rapid economic growth in and around Bangkok. The government has tried to stimulate provincial economic growth with programs such as the Eastern Seaboard project and various populist and crop price support policies.

Although the economy has demonstrated moderate positive growth in recent years, future performance depends on moving up on the value-added ladder away from low-wage industries where regional competition is growing. Key reforms are needed to open the financial sector; improve the foreign investment climate, including updating telecommunications capabilities; and stimulate domestic investment and consumption to balance reliance on exports. Logistics networks and electricity generation increasingly run the risk of bottlenecks and may pose a challenge to growth. Thailand's relative shortage of engineers and skilled technical personnel may limit its future technological creativity and productivity, even as the government is pushing for an increase in the proportion that creative industries contribute to GDP from 12% to 20% by 2015.

GDP (2010 prelim.): $317 billion. (Data based on the National Economic and Social Development Board)
Annual GDP growth rate (2010 prelim.): 7.8%.
Inflation rates (2010): 3.3% (headline) and 0.9% (excluding energy and food prices).
Per capita income (2010 prelim.): $4,716.
Unemployment rate (2010 prelim.): 1.0% of total labor force.
Natural resources: Tin, rubber, natural gas, tungsten, tantalum, timber, lead, fish, gypsum, lignite, fluorite.
Agriculture (12% of GDP): Products--rice, tapioca, rubber, corn, sugarcane, coconuts, soybeans.
Industry: Types--tourism, textiles, garments, agricultural processing, cement, integrated circuits, jewelry, electronics, petrochemical, and auto assembly.
Trade (2010 preliminary): Merchandise exports--$188.8 billion. Products--automatic data processing machines and parts, automobiles and parts, precious stones and jewelry, refined fuels, rubber, electronic integrated circuits, polymers of ethylene and propylene, rice, iron and steel and their products, rubber products, chemical products. Major markets--ASEAN, EU, China, U.S., Japan, and Hong Kong. Merchandise imports--$175.5 billion. Products--crude oil, machinery and parts, electrical machinery and parts, chemicals, iron and steel and their products, electrical circuits panels, computers and parts, other metal ores and metal waste scrap, ships and boats and floating structure, jewelry including silver and gold. Major suppliers--Japan, ASEAN, China, the Middle East, EU, and U.S.

Geography of Thailand

Location: Southeastern Asia, bordering the Andaman Sea and the Gulf of Thailand, southeast of Burma Map references: Southeast Asia Area: total area: 513,115 sq km (198,114 sq.mi) land area: 511,770 sq km comparative area: about the size of Texas Land boundaries: total 4,863 km, Burma 1,800 km, Cambodia 803 km, Laos 1,754 km, Malaysia 506 km Coastline: 3,219 km International disputes: boundary dispute with Laos; unresolved maritime boundary with Vietnam; parts of border with Thailand in dispute; maritime boundary with Thailand not clearly defined Climate: tropical; rainy, warm, cloudy southwest monsoon (mid-May to September); dry, cool northeast monsoon (November to mid-March); southern isthmus always hot and humid Terrain: Densely populated central plain; Khorat plateau in northeast; mountain range in the west; southern isthmus joins the land mass with Malaysia. Cities: Capital-Bangkok (pop. 9 million est.) Other cities--Chiang Mai (160,000), Hat Yai (140,000), Nakon Ratchasima (190,000) Natural resources : tin, rubber, natural gas, tungsten, tantalum, timber, lead, fish, gypsum, lignite, fluorite
Environment: current issues: air pollution from vehicle emissions; water pollution from organic and factory wastes; deforestation; soil erosion; wildlife populations threatened by illegal hunting natural hazards: land subsidence in Bangkok area resulting from the depletion of the water table; droughts international agreements: party to - Climate Change, Endangered Species, Marine Life Conservation, Nuclear Test Ban, Ozone Layer Protection, Tropical Timber 83; signed, but not ratified - Biodiversity, Hazardous Wastes, Law of the Sea Note: controls only land route from Asia to Malaysia and Singapore

Government of Thailand

GOVERNMENT AND POLITICAL CONDITIONS
Thailand is a constitutional monarchy. From 1992 and until the 2006 coup, the country was considered a functioning democracy with constitutional changes of government. Generally free and fair multi-party elections held in December 2007 subsequently restored democratic governance 1 year after the coup. The King has little direct power under Thailand's constitutions but is a symbol of national identity and unity. King Bhumibol (Rama IX)--who has been on the throne since 1946--commands enormous popular respect and moral authority, which he has used on occasion to resolve political crises that have threatened national stability.

Under the 2007 constitution, the National Assembly consists of two chambers--the Senate and the House of Representatives. The Senate is a non-partisan body with 150 members, 76 of whom are directly elected (one per province). The remaining 74 are appointed by a panel comprised of judges and senior independent officials from a list of candidates compiled by the Election Commission. The House has 480 members, 400 of whom are directly elected from constituent districts and the remainder drawn proportionally from party lists. Constitutional amendments that would change the number and manner of election of House members were under consideration as of January 2011, in anticipation of elections later in 2011.

Thailand's legal system blends principles of traditional Thai and Western laws. Under the constitution, the Constitutional Court is the highest court of appeals, though its jurisdiction is limited to clearly defined constitutional issues. Its members are nominated by a committee of judges, leaders in parliament, and senior independent officials, whose nominees are confirmed by the Senate and appointed by the King. The Courts of Justice have jurisdiction over criminal and civil cases and are organized in three tiers: Courts of First Instance, the Court of Appeals, and the Supreme Court of Justice. Administrative courts have jurisdiction over suits between private parties and the government, and cases in which one government entity is suing another. In Thailand's southern border provinces, where Muslims constitute the majority of the population, Provincial Islamic Committees have limited jurisdiction over probate, family, marriage, and divorce cases.

Thailand's 77 provinces include the metropolis of greater Bangkok. Bangkok's governor is popularly elected, but those of the remaining provinces are career civil servants appointed by the Ministry of Interior.

Principal Government Officials
Chief of State--King Bhumibol Adulyadej
Prime Minister--Abhisit Vejjajiva
Minister of Foreign Affairs--Kasit Piromya
Ambassador to the U.S.--Kittiphong Na Ranong
Ambassador to the UN--Norachit Sinhaseni

Thailand maintains an embassy in the United States at 1024 Wisconsin Ave. NW, Washington DC 20007 (tel. 202-944-3600). Consulates are located in New York City, Chicago, and Los Angeles.

Type: Constitutional monarchy.
Constitution: Thailand adopted its current constitution following an August 19, 2007 referendum.
Independence: Never colonized; traditional founding date 1238.
Branches: Executive--King (chief of state), Prime Minister (head of government). Legislative--bicameral, with a fully-elected House of Representatives and a partially-elected Senate. Judicial--composed of the Constitutional Tribunal, the Courts of Justice, and the Administrative Courts.
Administrative subdivisions: 76 provinces, including Bangkok municipality, subdivided into 877 districts, 7,255 tambon administration, and 74,944 villages.
Political parties: Multi-party system; Communist Party is prohibited.
Suffrage: Universal and compulsory at 18 years of age.

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History of Thailand

Southeast Asia has been inhabited for more than half a million years. Recent archaeological studies suggest that by 4000 B.C., communities in what is now Thailand had emerged as centers of early bronze metallurgy. This development, along with the cultivation of wet rice, provided the impetus for social and political organization. Research suggests that these innovations may actually have been transmitted from there to the rest of Asia, including to China. The Thai are related linguistically to groups originating in southern China. Migrations from southern China to Southeast Asia may have occurred in the 6th and 7th centuries. Malay, Mon, and Khmer civilizations flourished in the region prior to the arrival of the ethnic Thai. Thais date the founding of their nation to the 13th century. According to tradition, in 1238, Thai chieftains overthrew their Khmer overlords at Sukhothai and established a Thai kingdom. After its decline, a new Thai kingdom emerged in 1350 on the Chao Praya River. At the same time, there was an equally important Tai kingdom of Lanna, centered in Chiang Mai, which rivaled Sukhothai and Ayutthaya for centuries, and which defines northern Thai identity to this day. The first ruler of the Kingdom of Ayutthaya, King Rama Thibodi, made two important contributions to Thai history: the establishment and promotion of Theravada Buddhism as the official religion--to differentiate his kingdom from the neighboring Hindu kingdom of Angkor--and the compilation of the Dharmashastra, a legal code based on Hindu sources and traditional Thai custom. The Dharmashastra remained a tool of Thai law until late in the 19th century. Beginning with the Portuguese in the 16th century, Ayutthaya had some contact with the West, but until the 1800s, its relations with neighboring nations, as well as with India and China, were of primary importance. After more than 400 years of power, in 1767, the Kingdom of Ayutthaya was brought down by invading Burmese armies and its capital burned. After a single-reign capital established at Thonburi by Taksin, a new capital city was founded in 1782, across the Chao Phraya at the site of present-day Bangkok, by the founder of the Chakri dynasty. The first Chakri king was crowned Rama I. Rama's heirs became increasingly concerned with the threat of European colonialism after British victories in neighboring Burma in 1826. The first Thai recognition of Western power in the region was the Treaty of Amity and Commerce with the United Kingdom in 1826. In 1833, the United States began diplomatic exchanges with Siam, as Thailand was called until 1938. However, it was during the later reigns of Rama IV (or King Mongkut, 1851-68), and his son Rama V (King Chulalongkorn (1868-1910)), that Thailand established firm rapprochement with Western powers. The Thais believe that the diplomatic skills of these monarchs, combined with the modernizing reforms of the Thai Government, made Siam the only country in South and Southeast Asia to avoid European colonization. In 1932, a bloodless coup transformed the Government of Thailand from an absolute to a constitutional monarchy. King Prajadhipok (Rama VII) initially accepted this change but later surrendered the kingship to his 10-year-old nephew. Upon his abdication, King Prajadhipok said that the obligation of a ruler was to reign for the good of the whole people, not for a select few. Although nominally a constitutional monarchy after 1932, Thailand was ruled by a series of military governments interspersed with brief periods of democracy. Following the 1932 revolution that imposed constitutional limits on the monarchy, Thai politics was dominated for a half-century by a military and bureaucratic elite. Changes of government were effected primarily by means of a long series of mostly bloodless coups. Thailand was occupied by the Japanese during the Second World War until Japan's defeat in 1945. Beginning with a brief experiment in democracy during the mid-1970s, civilian democratic political institutions slowly gained greater authority, culminating in 1988 when Chatichai Choonavan--leader of the Thai Nation Party--assumed office as the country's first democratically elected Prime Minister in more than a decade. Three years later, yet another bloodless coup ended his term. Shortly afterward, the military appointed Anand Panyarachun, a businessman and former diplomat, to head a largely civilian interim government and promised to hold elections in the near future. However, following inconclusive elections, former army commander Suchinda Kraprayoon was appointed Prime Minister. Thais reacted to the appointment by demanding an end to military influence in government. Demonstrations were violently suppressed by the military; in May 1992, soldiers killed at least 50 protesters. Domestic and international reaction to the violence forced Suchinda to resign, and the nation once again turned to Anand Panyarachun, who was named interim Prime Minister until new elections in September 1992. In those elections, the political parties that had opposed the military in May 1992 won by a narrow majority, and Chuan Leekpai, a leader of the Democratic Party, became Prime Minister. Chuan dissolved Parliament in May 1995, and the Thai Nation Party won the largest number of parliamentary seats in subsequent elections. Party leader Banharn Silpa-Archa became Prime Minister but held the office only little more than a year. Following elections held in November 1996, Chavalit Youngchaiyudh formed a coalition government and became Prime Minister. The onset of the Asian financial crisis caused a loss of confidence in the Chavalit government and forced him to hand over power to Chuan Leekpai in November 1997. Chuan formed a coalition government based on the themes of prudent economic management and institution of political reforms mandated by Thailand's 1997 constitution. In January 2001, telecommunications multimillionaire Thaksin Shinawatra and his Thai Rak Thai (TRT) party won a decisive victory on a populist platform of economic growth and development. In the February 2005 elections, Thaksin was re-elected by an even greater majority, sweeping 377 out of 500 parliamentary seats. Soon after Prime Minister Thaksin's second term began, allegations of corruption emerged against his government. Peaceful anti-government mass demonstrations grew, and thousands marched in the streets to demand Thaksin's resignation. Prime Minister Thaksin dissolved the Parliament in February 2006 and declared snap elections in April. The main opposition parties boycotted the polls, and the judiciary subsequently annulled the elections. A new round of elections was anticipated in November 2006. Before new elections could be held, on September 19, 2006 in a non-violent coup d'etat, a group of top military officers overthrew the caretaker administration of Thaksin Shinawatra, repealed the constitution, and abolished both houses of Parliament. Soon thereafter, the coup leaders promulgated an interim constitution and appointed Surayud Chulanont as interim Prime Minister. In a national referendum on August 19, 2007, a majority of Thai voters approved a new constitution drafted by an assembly appointed by the coup leaders. The interim government held multi-party elections under provisions of the new constitution on December 23, 2007, which resulted in the People's Power Party (PPP) winning a plurality of 233 of the 480 seats in the lower house of Parliament. PPP leader Samak Sundaravej formed a coalition government and formally took office as Prime Minister on February 6, 2008. Thailand's southern border provinces have long been host to a secessionist movement. Since 2004, violent ethnic Malay separatists have conducted an insurgency in the provinces of Narathiwat, Yala, Pattani, and Songkhla against symbols and representatives of government authority, as well as against civilians, which has resulted in hundreds of deaths. Since the end of the Second World War in 1945, Thailand has had very close relations with the United States. Threatened by communist revolutions in neighboring countries such as Vietnam, Cambodia, and Laos, Thailand actively sought U.S. assistance to contain communist expansion in the region. Thailand also has been an active member in multilateral organizations like the Association of Southeast Asian Nations (ASEAN) and the Asia-Pacific Economic Cooperation (APEC) forum.

People of Thailand

Thailand (previously Siam) has always been a multi-ethnic, multi-confessional society. More than 85% speak a variant of Thai and share a common culture, though there is a strong sense of regional identity and pride in many areas of Thailand. Roughly one-third of the population is in central Thailand, including Bangkok; one-third in the northeast, with significant Lao and Khmer heritage; 20% in the north; and 15% in the south. Ethnic Malay Muslims comprise a majority in the three southernmost provinces. Central Thai is the language taught in schools and used in government. Lao, as well as “Isaan dialect”, is spoken widely in northeastern Thailand; “Gam Muang” or northern dialect is spoken in the north; and a southern Thai dialect in the mid-south. Several other Tai dialects are spoken among smaller groups, such as the Shan (Tai Yai), Lue, and Phutai. Up to 12% of Thai are of significant Chinese heritage, but the Sino-Thai community is the best integrated in Southeast Asia. Other groups include the Khmer in border provinces with Cambodia; the Mon, who are substantially assimilated with the Thai; and the Vietnamese. Smaller mountain-dwelling tribes, such as the Hmong, Mein, and the Karen, number about 788,024. The population is mostly rural, concentrated in the rice-growing areas of the central, northeastern, and northern regions. However, as Thailand continues to industrialize, its urban population--31.6% of total population, principally in the Bangkok area--is growing. Thailand's highly successful government-sponsored family planning program has resulted in a dramatic decline in population growth from 3.1% in 1960 to less than 1% today. Life expectancy also has risen, a positive reflection of Thailand's public health efforts. Thailand’s model intervention programs in the 1990s also averted what could have been a major AIDS epidemic. Even so, today, approximately 1.4% of the adult population lives with HIV/AIDS. The constitution mandates at least 12 years of free education; however, only 9 years are compulsory. In early 2009, the Abhisit administration put into effect a program to provide 15 years of free education (3 years in preschool and grades 1-12). Education accounts for approximately 18.0% of total government expenditures. Theravada Buddhism is the major religion of Thailand, practiced by about 90% of its people. The government permits religious diversity, and other major religions are represented, with Muslim communities scattered throughout Thailand, and in larger numbers in the southern region. Spirit worship/animism and Hindu-Brahmic rituals are widely practiced. Nationality: Noun and adjective --Thai. Population (2009 est.): 67.0 million. (Data based on the Thailand National Statistic Office and the National Economic and Social Development Board.) Labor force (2009 est.): 38.4 million. Annual population growth rate (2009 est.): 0.5%. Ethnic groups: Thai 89%, other 11%. Religions: Buddhist 93%-94%, Muslim 5%-6%, Christian 1%, Hindu, Brahmin, other. Languages: Thai (official language); English is the second language of the elite; Malay and regional languages and dialects. Education: Years compulsory --9. Literacy --94.9% male, 90.5% female. Health (2008 est.): Infant mortality rate --18.23/1,000. Life expectancy --70.51 years male, 75.27 years female.